Naira Bounces Back Against US Dollar After Days Of Losses

• The value of the naira has bounced back against the United States dollar in the foreign exchange market
• The latest naira exchange rate comes on the back of consecutive losses for the naira across all markets
• The Central Bank of Nigeria (CBN), in recent days, has injected dollars into the market to help the naira

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

The Nigerian currency, the naira has appreciated against the United States dollar in the official market.

Data from the Nigerian Foreign Exchange Market (NFEM) showed that the naira closed at the week ending Friday, March 14 at N1,522.37/$1.

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Friday's exchange rate is a 1.19%or N18.31 appreciation for the naira when compared to the previous day's closing rate of N1.540.68/$1 recorded in the official market.

Equally, the Nigerian currency appreciated against the British pound sterling at NAFEM on Friday by N25.93 to sell at N1,640.20/£1 versus the previous day’s N1,990.13/£1.

The naira also improved its value against the euro by N22.30 to quote at N1,653.78/€1, in contrast to the preceding session’s value of N1,676.08/€1.

Naira improves against dollar at black market

In the parallel market, also known as the black market, it was the same story for the naira against the US dollar.

Traders who spoke to Legit.ng confirmed that the Nigerian currency appreciated against the dollar.

Abudulahhi a BDC trader told Legit.ng on Sunday.

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"We sold the dollar at N1,585/1$ compared with the N1,590/$1 it was exchanged previously. This is because we receive less dollar requests from our customers."

Why naira improved

The naira's recent improvement is attributed to a significant forex injection into the market by the Central Bank of Nigeria (CBN).

Despite recent market pressures and a loss of over $2 billion in foreign reserves last month, the local currency had faced depreciation in previous sessions.

However, fresh injections during the latest session have bolstered its value in the official market.

Snapshot of naira rates in the official market

Based on CBN published rates, here is a breakdown of naira's performance against other foreign currencies in the NAFEM market.

• CFA: N2.54
• Yuan/Renminbi: N209.68
• Danish Krona: N221.67
• Euro: N1,653.78
• Yen: N10.21
• Riyal: N404.80
• South African Rand: N83.55
• Swiss Franc: N1,714.59
• Pounds Sterling: N1,964.20

Naira’s persistent struggles

Over the past two years, the Nigerian naira has grappled with instability, depreciation, and mounting economic pressures. A key challenge has been the persistent shortage of foreign exchange (FX), worsened by dwindling oil revenues—Nigeria’s primary source of FX earnings.

The Central Bank of Nigeria (CBN) has attempted various measures to stabilize the currency, including multiple exchange rate policies and FX restrictions. However, these interventions have often resulted in further uncertainty.

In 2023, the removal of fuel subsidies and the unification of exchange rates triggered a sharp decline in the naira’s value, as market dynamics played a larger role. This shift contributed to rising inflation, making food and essential goods more expensive.

Speculative trading and widespread dollar hoarding have further weakened the naira, with businesses and individuals seeking to safeguard their wealth against depreciation. Additionally, capital flight, sluggish foreign direct investment, and declining investor confidence have compounded the currency’s challenges.

Despite efforts to enhance local production and curb import dependence, Nigeria’s import-driven economy continues to strain FX reserves.

While recent monetary policies—such as interest rate hikes and crackdowns on currency speculation—aim to stabilize the naira, restoring confidence in the currency remains a formidable task.

ABCON calls on CBN to sell dollars to BDCs

Earlier, Legit.ng reported that the Association of Bureau De Change Operators of Nigeria (ABCON) has called on the Central Bank of Nigeria (CBN) to maintain its current policy of selling dollars to Bureau De Change (BDCs).

Aminu Gwadabe, ABCON president said that CBN's intervention has had a positive impact on the stability and appreciation of the naira in the foreign exchange market in the past weeks.

The article has been updated with additional comments by head of business desk Victor Enengedi.